I spend over $200k per year and want to stop working in a few year – how much money do I need in my brokerage account to fund my lifestyle?

A Reddit poster is trying to figure out if he’s going to be ready to retire in a few years.

However, he has a fairly high cost of living, as he lives in an expensive area and has three children. He’s specifically trying to figure out if he will have the money to get him through until he reaches the age when he can start taking money out of his 401(k). 

Here’s what the Redditor needs to do to figure out if he’ll be ready to stop working on his preferred schedule. 

Running the numbers is the key to figuring out whether early retirement is feasible

According to the Redditor, he currently has $1 million in various retirement accounts, including a 401(k) and traditional and Roth IRAs. He’s planning to convert all of this money into Roth IRAs over time. He also has $3 million in taxable brokerage accounts, with investments of various risk profiles. 

He’s going to continue working for at least five more years until he is 40, and both he and his wife are going to max out their 401(k) plans during that time. He’s calculated that based on where he is starting with $1 million, plus the contributions over the next few years, plus 20 years of compound growth, he will end up with over $5 million in his 401(k) by he time he reaches age 60. At a 4% withdrawal rate, that would provide $200k per year. When combined with Social Security, and given that his kids will be grown and his house paid off, he feels confident that’s enough. 

However, what he’s trying to figure out now is how much money he needs in his taxable brokerage accounts to support himself until age 60 without having to access his retirement funds early. He’s spending $220,000 right now but thinks that he will need to increase that to $320K to factor in things like taxes, health insurance, and additional living expenses while his kids are young. 

He wants to know if a $4.5 million investment account would be sufficient to meet his spending needs if he only needs that money to last for 20 years before he starts relying on his 401(k). Running the numbers through online calculators suggests he should be OK, and, in fact, that his money could last for around 25 years, assuming he earned a 6% average annual return and most of his withdrawals were taxed at the long-term capital gains tax rate. 

However, some Redditors think he could be cutting it too close and that he’d likely need close to $6 million if he wants to be sure his funds will last. 

Talking to a financial advisor is the best move

While you can run the numbers by yourself and use online calculators to estimate the amount of money you’ll have left based on your projected spending, this is a pretty important decision. And, unfortunately, if you leave work and it turns out you don’t have enough money, it may be very hard to just jump back into a high-paying job. 

As a result, the best course of action is going to be talking with a financial advisor. An advisor can help you to evaluate the big picture, make sure you aren’t overlooking anything, determine how to allocate your assets, and make detailed projections about just how long your money will last.

Getting this type of professional advice will help give you the peace of mind of knowing you’re making the right move so you can retire with the confidence that you’ll have financial security for life. 

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